In a speech in Sydney last night, the RBA's Dr Philip Lowe told the Australian Business Economists annual dinner that the RBA still thinks the Aussie remains too high and it will depreciate as the terms of trade decline. Photo: Louie Douvis

In a speech in Sydney late Tuesday, Lowe told the Australian Business Economists annual dinner that the RBA still thinks the Aussie remains too high and it will depreciate as the terms of trade decline.

"In terms of the exchange rate, the RBA has been saying for a while now that a lower value of the Australian dollar would be helpful from an overall macroeconomic perspective," according to the text of Lowe's speech.

"If the exchange rate is to play its important stabilising role, it needs to go down when the terms of trade and investment are declining, just as it went up when the terms of trade and investment were rising. To date, as we expected, we have seen some adjustment, but if our assessment of the fundamentals is correct we would expect to see more in time."

Also pressuring the Aussie was another slide in the price of iron ore. Ore with 62 per cent content delivered to Qingdao fell 1.2 per cent to $US69.58 a dry metric ton today, the lowest since June 2009, data from Metal Bulletin Ltd showed. Prices are heading for a 13 per cent loss this month, the most since May.

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"The biggest problem is on the supply side as majors like BHP and Rio are pushing huge volumes into the lacklustre demand environment," Paul Gait, an analyst at Sanford C. Bernstein & Co in London, told Bloomberg this week. "To me $US65 feels like a floor."

Yen lifts on BoJ minutes

The yen is higher after Bank of Japan minutes showed the hurdle to further quantitative easing was high, while the greenback slipped as data showing a deterioration in consumer confidence overshadowed a surprise upgrade in third-quarter US growth.

Still the yen, dollar and euro held in tight ranges since Monday ahead of the US Thanksgiving holiday when US markets will close.

"I don't see a reason to trade aggressively before Thanksgiving," said Lane Newman, director of foreign exchange at ING Capital Markets in New York.

Some BOJ board members were concerned that expanding the central bank's quantitative easing could raise the risk that it will be seen as financing the government deficit, minutes of the October 31 meeting released on Tuesday showed.

Those concerns came after the BOJ stunned the market last month by expanding its annual government debt purchases to ¥80 trillion from ¥50 trillion in an effort to stimulate Japan's long struggling economy.

That move raised bets the BOJ would pursue more stimulus, pushing the yen to a seven-year low against the dollar last week.

Some analysts said the swift depreciation of the yen, which would help Japanese exporters, might be overdone.

Greenback bolstered by revision

At about 3.30am AEDT, the US dollar was down 0.3 per cent at 117.93 yen after it struck a seven-year high of 118.98 last week. The euro dipped 0.06 per cent at 147.03 yen after hitting a six-plus year peak of 149.12 yen last Thursday, Reuters data showed.

The US dollar earlier got a brief boost after the government upgraded its reading on third-quarter gross domestic product to 3.9 per cent. Its gains faded after the Conference Board reported its index on US consumer confidence surprisingly fell to a five-month low in November.

The euro was up 0.2 per cent at $US1.2464, rebounding from a near two-year low of $US1.2358 struck earlier this month.

The dollar index was down 0.2 per cent at 87.949 after it touched a near 4-1/2 year high of 88.440 on Monday.